CORRECTED-U.S. oil drillers add rigs for third week in a row -Baker Hughes

Reuters Staff

3 Min Read

(Corrects to '11-month high' in the first paragraph)
June 17 (Reuters) - U.S. drillers this week added oil rigs
for a third week in a row for the first time since August,
according to a closely followed report on Friday, as producers
seek more drilling permits after crude prices hit an 11-month
high over $51 a barrel last week.
Despite a decline in U.S. crude futures to one-month
lows to under $47 this week, analysts and producers have said
oil over $50 was a key level that would trigger a return to the
well pad and drilling permits are a leading indicator of future
drilling.
Drillers added nine oil rigs in the week to June 17,
bringing the total rig count up to 337, compared with 631 a year
ago, energy services firm Baker Hughes Inc said.
RIG-OL-USA-BHI
Before this week, drillers added rigs in only three out of
23 weeks this year, cutting on average nine oil rigs per week
for a total of 208.
That compares with cuts of 18 rigs per week on average in
2015 for a total decline of 963, the biggest annual decline
since at least 1988 amid the biggest rout in crude prices in a
generation.
The rig count has declined since hitting a peak of 1,609 in
October 2014. The slide came three months after U.S. crude
futures began crumbling from a high of around $107 in
July 2014 to reach a near 13-year low of about $26 in February
this year.
Since the February price low, U.S. crude futures have almost
recouped half their losses. On Friday, they were trading at
around $47, or 3 percent lower on the week, amid anxiety over
Britain's possible exit from the European Union.
To figure out how many rigs U.S. producers will likely add,
analysts said they look to drilling permits, which they forecast
rising.
In most states, producers drill a land well about two months
after the state issues a permit because the firm has already
incurred significant expenses to secure the acreage and conduct
geologic surveys, among other things, analysts at U.S.
investment banking advisory Evercore ISI said this week.
"Land operators are restless after a year and a half of
declining activity, and we expect the recent crude rally to
bolster permit application totals heading into the warmer (and
dryer) months," Evercore said, noting the Permian and Eagle Ford
will likely be the first-move shale plays for producers looking
to put rigs back to work in 2017.
After falling to 1,807 permits in February, the lowest
monthly level since at least 2006, Evercore forecast the number
of land permits would rise to a year-to-date high around 2,119
in June from 2,033 in May.
That put total annual land permits on track this year to
fall below 2015's lows. Land permits peaked at 86,955 in 2008
and bottomed at 43,940 in 2015, according to Evercore data going
back to 2006.
Pioneer Natural Resources Co said this week it
expects to boost its 2016 capital budget by about $100 million
to $2.1 billion as a result of rig additions.
(Reporting by Scott DiSavino; Editing by Marguerita Choy)